How to Reduce Your Bank Charges

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We keep money in the bank, so that we can easily manage our money, and spend the rest of our time at work, doing what we enjoy, or spending time with loved ones. But what do you do when the bank keeps charging you?

Bank charges cost you more money - money that you have worked really hard to make.  These bank charges or banking expenses may appear to you in a variety of ways, such as interest on loans, fees for a particular transaction, deposits, international wire transfers, or other bank services you may have used.

Since our aim is to reduce bank charges, we need to know what fees we are liable for, if we give our loyalty to a particular bank.  Therefore, it is always crucial to understand your rights and obligations before you make the decision to open an account with any bank. You can do this by arranging an appointment with your Personal Banker, who can help you find the services that suit your specific financial situation - so that you will get no nasty surprises when you are asked to pay for bank expenses.

Give your Personal Banker your contact information, so that he or she can contact you about any updates on the bank services you are using, as well as updates on other bank services because there could be a specific deal you could use, too.

However, you must be aware that personal and business account fees may vary, therefore, a personal banker, who is responsible for performing banking duties and overseeing the financial activities for personal accounts only may not be the best solution to this problem. Therefore, what you should do instead is take some time to check all their fees online on the bank’s website and make a well-informed decision.

Monthly Maintenance Fees

Your bank may charge you monthly maintenance fees and this charge will appear on your bank statement. The fees, which always depend on the bank’s policy, can be found on the bank’s website where they will explain what their monthly maintenance fees are for and the exact amount you will be paying so you can be more prepared prior to opening an account.

ATM Machines

Then there is the use of the ATM machine.  Sometimes, we are in desperate need of cash but the nearby ATM machine is not offered by your bank. Of course, you are allowed to use their ATM, however, if you use it, then you will be charged a fee, and there is the possibility that your own bank will charge a fee, too! 

So, before you open an account with a bank, make sure it has several branches with ATM machines available, or use a bank that does not charge fees for using a different bank’s ATM machine.

Loans

If you need to get a loan, make sure you are on the right installment plan, so that you can pay - without having to deal with unnecessary charges.  Therefore, the first step is to understand your APR, or your Annual Percentage Rate. 

The APR is the total cost of borrowing for the consumer, expressed as an annual percentage on the loan offered. The APR includes all loan cost factors (including interest and all charges, which consumers have to pay). The APR is the best tool available as it includes all loan costs and helps you have a better picture when comparing various schemes from other banks.

Therefore, it is crucial to understand what the APR is and how much you will be paying in order to find the right loan deal for your specific needs.

Furthermore, make sure you don't miss an installment, because if you do miss a payment, then it could mean extra bank charges!  You have the option to pay your installments automatically with a standing order so that your bills will always be paid on time.  It is also worth your time to set up automatic payments for utility bills, and so on - so that all your payments are sorted on time.  One way to familiarize yourself with this is to sign up for Internet Banking. 

If you do decide to pay a loan by scheduling standing orders, then make sure you have chosen a good payment date.  For example, if payment is due on the 10th of each month but you get paid on the 15th of each month, then chances are you will miss a payment and will eventually get charged interest plus a fixed fee!  Therefore, you need to take into consideration all your expenses and set a suitable payment date to avoid any extra costs.  

Overdraft Fees

You've got your loan payment situation figured out, but there is also the possibility of overdraft fees!  This is when a check has been given out, and the amount of that check is larger than the balance in your account.  That means the transaction cannot be processed, and in this case, the bank will charge you an overdraft fee.  They could also not allow the transaction to go through and then charge you an insufficient funds fee.

Fortunately, you can stop this from happening through a number of available tools. Ask your employer to pay you through direct deposit, because this way, you get your funds faster, which means there is more of a chance that future checks from your account will go through right away. 

Other Ways to Stop Overdraft Fees:

  • Deposit some money into your savings account, so that you can use the funds in the case of an emergency, and there are not enough funds in your checking account.  When that emergency occurs, simply transfer the funds from your savings account to your checking account.  Then, any checks made out can go through, and therefore, no fees!
  • Use Internet Banking, and use mobile banking, too.  We all have busy lives, so even when you are not at home, you can access your balance and get an idea of your financial situation anytime you like. This gives you more time to plan ahead - for future bank transactions, without any bank fees.
  • What if your balance goes under a certain amount?  It could be worth it to set up an alert - so that the bank can notify you if that happens. In this case, you can reload your account with enough funds, and avoid future overdraft fees.
  • Be wary of overdraft protection.  This allows you to temporarily make purchases on your debit card, even if there are not enough funds in your account.  However, if that happens, you will be charged an overdraft fee.  So, if the bank starts to tell you about overdraft protection, remember that it protects you temporarily, but is not free - and there are fees!

 

Stop Payments on Checks

What if one or two organizations send you a check, you deposit it...and then you find that these organizations can't or don't want these checks to go through and they request a stop payment on these checks?  

The problem is that you have already deposited these checks into your bank account.  When these organizations issue these stop payment requests, then it means that the bank stops these transactions from being deposited into your account. 

This could be one problem but there is also a second problem related to stop payments on checks; the bank could charge your account a fee - because the check was stopped!  It is understandable if you feel this is not fair, because after all, you were not the one who made the request to stop the check.  It could be worth it to call your bank and request the fee to be removed; it is known that in some cases, banks have removed this type of fee because they want to keep you as a loyal customer. 

Try Using a Credit Union (This is for the U.S Only)

A credit union can be a good choice for your money.  A Credit Union is run by members and their purpose is not solely for profit.  Yes, okay, a credit union can make a profit, but their purpose is to use any profits made to provide better services to customers, with lower average fees. 

As a credit union is more likely to focus on customers' needs, then you can easily find a product that suits you, and eventually avoid certain bank fees.

A Community Bank That Suits You and Helps You Avoid Fees

Even if you just want to open an account, the bank may charge you some fees. "Free checking accounts used to be commonplace" as Richard Barrington, Senior Financial Analyst at MoneyRates.com, said, however, this is no longer the case.

A Money Rates survey found that checking accounts still cost an annual $159 for Americans.  While big banks spend their money on Wall Street, smaller ones only prosper if the community prospers. A community bank wants to help you out, and, therefore, you can get a free checking or savings account from a community bank.  Another benefit is that a small financial institution is more likely to give better terms on credit cards and loans, so make sure you enquire about those, and study those terms, too.

You can open an account there, if it suits you, and then use another bank that provides the other services you may need.  If you want to open multiple accounts offering different services you can always open those accounts on different banks, depending on the services they offer.

Bank charges can be very annoying, and at times, ruin your saving plans. Fortunately, there are several ways to reduce those bank charges to a minimum by following the tips mentioned above.